My house and what brought me here

In today’s article, I’m going to discuss the current dilemma with my house, the choices I made that got me here, and how I see things playing out over the next few years.

Background information

Let’s go way back to 2014. That year, I proposed to my then-girlfriend. After we were engaged, I moved in with her.

A smallish, one bedroom, one bathroom apartment, but affordable. After about 6 months of that, we moved to a different apartment. Different city.

This one was 2 bedrooms, 1 ½ bathrooms, but 50% more for rent. The majority of the cost, in my opinion, was due to location.

Our first apartment was in a suburb of Milwaukee, Wisconsin. The second one was in Milwaukee, in a sought after neighborhood. At the time, this seemed like a fun choice. We’d experience life downtown in a bigger city (Milwaukee is small compared to actual BIG cities).

Fast forward 9 months. We were looking to get a puppy, but our landlord wouldn’t accept a pet younger than 1 year of age. Add that onto poor management and several plumbing issues, we’d had enough.

Time to move

Found a sub-lessor for the remaining three months on our lease, and moved in with my folks.

We decided that was the best choice because we wanted to buy, and living with them costing very little rent was the easiest, and fastest, way to save for a down payment.

Three months with them and we saved enough for a small down payment (FHA mortgage requires just 3.5% down).

March of 2016 is when we bought our first house. 3 bedrooms, 2 bathrooms. Perfect for the two of us. However, the city we lived in didn’t have good schools, so we knew (as we wanted kids) that living here would be temporary.

The plan was to live in this house (located in West Allis, Wisconsin) for 4-5 years until our child started school. Then we would move to a different city with better schools.

Moving again

Fast forward to late spring of 2018. One day, I was browsing on Realtor and found a house in the suburbs.

I liked what I saw, liked the city, and the price. I showed my wife and we agreed to take a look at it. Obviously, this was quite a few years before our planned move.

We looked at the house and loved it. We loved it so much that we submitted an offer in the car on our way back from looking at it.

We moved into that house (located in Oconomowoc, Wisconsin) in July of 2018, and that kind of brings us to today.

Real quick. I wanted to briefly explain the decision to move so far ahead of schedule. I knew our budget would be tight with the increased mortgage payment, but I was looking far ahead. The schools were better, the neighborhood was safer, and it would’ve been a great place to raise a family.

Current housing woes

As I’ve noted before, I’m in the middle of a divorce. Part of that divorce is selling our house. As you can imagine, having lived there for only one year, there wasn’t any equity built up.

We placed the house on the market in the middle of October. We started out asking $239,000 and didn’t hear much of anything for about a week.

We dropped the asking price by $10,000 to $229,000. Officially, we received our first offer on 12/2/19 (I’m writing this on 12/3/2019).

Their offer came in at $215,000 cash. Quite a bit lower, so we countered back with our full asking price.

They countered today at $225,000 and we accepted that.

Here’s the problem. We bought the house for $239,000 and we’re selling it (pending inspection and further negotiation) for $225,000. Again, we put 3.5% down. Still, we have $230,000 left on the mortgage.

That brings in a short sell situation. This means we will have to cut a check to the title company for the difference to clear the title.

You’re probably thinking $5,000 isn’t too bad. Hold on. We still have to factor in closing costs, which include the realtor’s commission. A rough estimate puts the check we’ll have to write around $15,000/$16,000. Ouch.

Lessons learned

Nobody has a crystal ball. Did I know I’d have to sell the house a year after buying it? No. Do I wish I would’ve done things differently? Sometimes, but I try to look at every situation as a learning experience.

I take the good and the bad. My son took his first steps in the Oconomowoc house. He had a lot more space to run and play. He had a fenced-in backyard. It was perfect for him and for us. I wouldn’t take that back.

Do I wish we would’ve stayed in the one-bedroom, one-bathroom apartment until we were ready to buy? Absolutely.

That would’ve given us so much more time to save. Figuring we would’ve lived there for one full year before buying the West Allis house, and the rent was roughly $400 cheaper than the Milwaukee apartment. That’s an easy $4,000.

Not to mention the commute would’ve been shorter. Insurance would’ve been cheaper. Heck, even our grocery bill would’ve been less.

They’re all learning experiences. Those lessons sting right now, but I’ll learn from it and hopefully, you’ll learn from me.

My name is Jacob Sensiba and I am a Financial Advisor. My areas of expertise include, but are not limited to, retirement planning, budgets, and wealth management. Please feel free to contact me at: jacob@crgfinancialservices.com

Registered representatives offer securities through Securities America, Inc. Member FINRA/SIPC. Advisory services offered through Securities America Advisors, Inc., an SEC Registered Investment Advisory Firm, Jacob Sensiba, Investment Advisor Representative. CRG Financial Services, Inc. is not affiliated with the Securities America companies. Securities America and its representatives do not provide tax advice. Please consult with your tax advisor regarding your specific situation. The opinions and forecasts expressed are those of the author, and may not actually come to pass. This information is subject to change at any time, based on market and other conditions and should not be construed as a recommendation of any specific security or investment plan. Past performance does not guarantee future results.

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